The U.S. economy has been sending mixed signals — enough to leave even seasoned analysts feeling dizzy. In the span of just two days, new data told sharply different stories about inflation, jobs and consumer spending, underscoring the uncertainty surrounding the country’s economic trajectory after a turbulent fall.
As of December 17 at 5:19 a.m. Eastern Time, ABC News declared the “U.S. economy flashes warning signs” based on a slew of troubling indicators. By the next morning, fresh data from the Consumer Price Index showed annual inflation cooling to 2.7%, down 20 basis points from September's 2.9% reading. No October inflation figure was available because of the federal government shutdown, leaving an information gap right in the middle of a critical data run.
That missing month has added to the confusion. The Federal Reserve has already cut rates several times this year and shifted its portfolio from mortgage-backed securities to short-term Treasurys while warning that further cuts may be limited. Labor market data have compounded the uncertainty. Partial October reports showed a loss of roughly 105,000 jobs, largely the result of deferred federal employee resignations earlier in the year.
“The October payrolls figure is jarring,” said Elyse Ausenbaugh, head of investment strategy at JP Morgan Wealth Management, in a statement to ABC News.
The Census Bureau added another data point to the uncertainty on December 16, reporting that retail sales in October were flat compared to September—a worrying sign at the start of the holiday shopping season.
“About half of holiday shoppers planned to begin making purchases before the end of October, but consumer pullbacks elsewhere left October retail sales right where they were in September,” Ted Rossman, senior industry analyst at Bankrate, told ABC News.
“Retail sales seem to be losing momentum at a crucial time of year.”
Consumer spending accounts for roughly 69% of GDP, making any holiday slowdown significant. The following day brought more ambiguity: the November Employment Situation Report showed a modest 64,000-job gain, which Comerica Bank Chief Economist Bill Adams noted failed to offset October’s losses.
“Healthcare and social assistance and construction added jobs in the last two months, but other private industries saw employment fall on net,” Adams wrote in a note.
Unemployment ticked up to 4.6%, the highest level since August 2021, while wage growth dropped to its lowest point since May 2021. And even those numbers may not be reliable — data collection disruptions following the shutdown could have skewed the results, adding yet another layer of uncertainty to an already murky picture.
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